FICO's online tools can be used to get a handle on credit scores.

Since FICO's "multi-variant analysis" causes one aspect of a credit report to shift a score one way or another. One way to see this variance in action is to try FICO's Credit Score Simulator and Estimator.

Credit Score Estimator

The FICO Score Estimator, available on the Bankrate Web site (http://origin.bankrate.com/brm/fico/calc.asp) is a useful tool in my opinion. Although it gives only ranges, it coincides with the real world in my experience; real-world scores seem to consistently fall near the middle of the FICO Estimator ranges. And while it doesn't interface directly with your individual credit report, it is useful for running hypothetical scenarios. Give the Estimator a try, changing a single variable and running multiple scenarios, to get an idea of what you can accomplish by modifying or deleting certain hypothetical entries and paying bills on time (over time).

Credit Score Simulator

In addition to the Estimator, FICO has also provided a tool called the Simulator (www.myfico.com). It goes beyond the hypothetical, serving as a personalized simulator that interfaces directly with your report, and you can peer into your future report by changing some variables. Although it doesn't give you the ability to simulate the deletion or alteration of tradelines and public records, using it in conjunction with the Estimator may give you some idea about where you can take your score and how fast, perhaps assisting you in the prioritization process.

Running Scenarios

Here are some generalities I've noticed with regard to FICO scores and reports that I've studied over time, viewing various credit reports and simultaneously toying with the FICO Score Estimator and Simulator:

A current or recent late payment will affect a score a great deal more than a bankruptcy that's been discharged for three years or more. Creditors who've had their accounts included in bankruptcy by a debtor will tag such accounts on a credit report as "included in bankruptcy." Removal of these accounts from a credit report has some affect on a score, around 10 points on average for each when a score is within the 600-730 range.

For credit reports with a very bad entry, like bankruptcy (more than three years old), yet no other bad marks, there's a FICO score ceiling (maximum) that falls around 730. This is true for someone with an average-length credit history (15 years), and the score doesn't improve much once three years have elapsed post-discharge. (Yes, it's possible for someone to have a bankruptcy and no other adverse entries, since those with a bankruptcy who are in the middle of credit repair will remove the other bad marks first if they've read my book, and then remove the bankruptcy in accordance with Chapter 10.) I ran the FICO Score Estimator to test this and noticed the bankruptcy variable was set to a max of three-plus years, which supports my theory. The Estimator listed the maximum under this scenario at 760, but I've yet to see a maximum of a range ever attained.

Using the scenario above, I simply removed the bankruptcy from the Estimator, and the FICO score maximum was then 790, only 30 points higher than the FICO cap where a bankruptcy was three years old.

Continuing with the same scenario, I changed another variable and added a single recent collection account to the 3-year-old bankruptcy. I posted it as a $250-$499 debt, plus indicated that it was currently late, and the score went to a range of 595-645, dropping the maximum by 115 points and the minimum by 105.

Although the Estimator doesn't ask about credit limits, it does ask for total non-mortgage debt and then asks about balances as a percentage of that debt. This seems odd. If the Estimator is to be taken at face value, then there's something it is using regarding total non-mortgage debt that should be discovered. Taking a closer look, I ran it using the max range of $20,000+ for the non-mortgage debt and then ran it again using $0. The score range was actually the same, 730-780. Suspecting that the debt would have an impact if there was recent lateness, I ran the Estimator again, simply changing a variable to include one recent late payment, and the ranges were still the same. And yet again, the same for high balances. I kept trying to get the simulated increase in debt to move the range but couldn't. This is consistent with my own experience: it doesn't appear that having a lot of non-mortgage debt and lots of accounts is a big issue; at issue are the balances relative to the limits, which are even weightier if there's derogatory history in the mix. (Though a lender can deny for having too many open accounts.)

The biggest downward moves come with recent late payments or collection accounts, recent bankruptcy, and high balances relative to limits. Multiple late payments will make payment history worse on a magnified scale, particularly if they're more recent. Within the last 90 days is the worst but will gradually carry less weight as time passes, especially up to three years.

Using these tools can be helpful, but remember that they're only to be used as a guide. To obtain the most impactful results, it's always best to remove anything adverse using self credit restoration.❑

About the Author, Dana Neal

Dana Neal learned all the ins and outs of the credit game while collecting debts for the Greater Lakes Higher Education Corporation. He quickly became disenchanted with the way his peers conducted themselves and with the state of credit reporting in the United States in general.

After graduating from Ohio State University with a degree in aviation, Neal went on to active duty, piloting several types of aircraft, including the UH-60 Black Hawk helicopter and various multi-engine airplanes.

He was injured in the line of duty and medically retired from military service, and his subsequent financial hardships led him to become a consumer advocate, dedicated to championing the cause of individual consumers. His mission: to inform others of their rights and to demonstrate that they wield significant power over their credit report. In keeping with that goal, he founded BestCredit. He now spends his time teaching others what his experience as both a collector and a debtor has taught him about debt collection and credit reporting.